D-Box Technologies

November 26, 2010

ANT opened a long position @$0.70.

We have been following this small cap Canadian company since last May (when it traded around $0.30).

The thesis here is that D-Box is the only player offering an end-to-end solution for movie theaters to offer motion enhanced seats. D-Box installs the seats in a movie theatre and then has a revenue split on seat sales. The theater charges higher prices for the premium seats and thereby drives incremental revenue. This appeals to theaters which have struggled to increase the volume of patrons and have instead tended to focus on extracting more revenue per visitor (i.e. the appeal of 3D which allowed them to increase ticket prices, or VIP sections with food service).

ANT considered entering over the last 6 months but held off until the management team proved it could sign a big industry player. The recent signining of a small deployment with Cineplex (Canada’s biggest and one of the most respected players in the business) shows that D-Box can land big accounts. This deal will greatly increase their credibility with large American theatre owners. The Cineplex deal is responsible for the recent doubling of the stock price.

The stock has a crazy valuation given that it is generating significant loses (17x Revenue).  But, the market here is large and D-Box is the only player that has relationships with all the key studios (who encode the motions into the film) and now is gaining traction with the theatres.  ANT believes that over the next few quarters D-Box will continue to land large accounts and therefore the stock will continue to set new highs/

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